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Evolving Commodity Market 8/25/11

The rules have changed, margins are higher, options are more expensive, volatility has increase so don't think this market can be traded with the same capital as years past. Additionally I feel a more hands on approach needs to be applied ...not the buy/sell and then walk away...only my opinion. Crude continues to fight the fight trading above the 20 day MA today but we will close slightly lower in the session. We maintain our bullish bias and have advised clients to buy dips. We would only change our tune on a settlement below $80/barrel in October. If the appreciation continues in the products we see it unlikely that Crude will not trade higher into next week. While Crude has been sideways RBOB and heating oi have picked up 10-15 cents in recent dealings. Natural gas is basing out in our estimation for a launch higher in the coming weeks. We feel on news of a tropical disturbance heading towards the gulf we could see a spike that leads to short covering and the rest will be history. Our target remains $4.25 and then $4.50. Stocks will close lower today for the first time this week down 1-2%. We are still anticipating a trade higher and if the market delivers we will likely look for bearish trades next week...stay tuned. Gold has over a $70 trading range today closing higher by .85% today just off the session highs. Prices violated the trend line that has held since this massive leg up began in early July so the fact that it held today is one point for the bulls. Though high to low the recent sell off is over $200/ounce we feel there could still be more downside. Ultimately we feel the $1650-1670 level is achieved before we see much higher ground...again this is my opinion in this Vegas like market. Silver bounced off the 100 day MA and preceded to close up nearly 5%. Nice move but like gold we feel there could still be some more downside. $37.50/ounce would get a buy back on our radar. We rarely trade copper for our clients but today's trade grabbed my attention with prices trading above the 20 day MA for the first time in one month. We could be breaking higher in "Dr. Copper" so stay tuned. In early dealings the Loonie traded above 1.0200 and the 20 day MA but failed to hold onto her gains virtually unchanged by day's end. Some clients remain long but I do not like that all week we've been closing well off the highs. I'm starting to get suspect of my clients long exposure here...stay tuned. The Yen broke down today and is nearly 3 cents off its highs from last week. Clients who were short September covered their shorts at a profit and will be looking to buy some more time and get short on a trade higher very soon. Sugar continued on its path lower as we expect price action below the 50 day MA next week and a trade closer to 26/cents in March. OJ was flat today...clients patiently wait for a 5% surge. Coffee in nine short sessions which have all been positive has gained nearly 13% lifting prices to two month highs. When we get out of either sugar shorts or OJ longs assuming prices remain elevated we will be getting clients short December coffee. Though far from our favorite trades positions with a lead can remain short Treasuries but we would not short fresh positions unless we spike higher or break the 20 day MA's. All the Ag's remain in overbought Territory but our only trade rec is shorts in December corn. A Doji star in yesterday's action also makes me feel better about our clients shorts. Nothing new to report in livestock...we are on the sidelines waiting for buy signals in either live cattle or lean hogs.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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